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Home My WebLink About07. Public Hearing to consider adopting the FY 2022-23 District Budget Page 1 of 341 Item 7. CENTRAL SAN BOARD OF DIRECTORS POSITION PAPER MEETING DATE: JUNE 16, 2022 SUBJECT: CONDUCT PUBLIC HEARING TO RECEIVE PUBLIC COMMENT AND CONSIDER ADOPTING THE FISCAL YEAR (FY) 2022-23 CENTRAL SAN BUDGET FOR THE FOLLOWING FUNDS: OPERATIONS AND MAINTENANCE, CAPITAL IMPROVEMENT, SELF-INSURANCE, AND DEBT SERVICE; AND FIND THE PROPOSED FY 2022-23 DISTRICT BUDGET IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITYACT (CEQA) SUBMITTED BY: INITIATING DEPARTMENT: KEVIN MIZUNO, FINANCE MANAGER ADMINISTRATION-FINANCE REVIEWED BY: EDGAR LOPEZ, CAPITAL PROJECTS DIVISION MANAGER PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION JEAN-MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL SERVICES Roger S. Bailey General Manager ISSUE It is Central San's practice to hold a public hearing to receive comment on the budget for the following funds: Operations and Maintenance, Capital Improvement, Self-Insurance, and Debt Service. BACKGROUND Central San's draft Fiscal Year(FY) 2022-23 Budget book (Attachment 1)was distributed to Board Members on May 5, 2022, at a regularly scheduled public meeting. The following is a timeline of meetings where the proposed FY 2022-23 Budget has been reviewed by the Board and its Committees and made available to the public for review and feedback: June 16, 2022 Regular Board Meeting Agenda Packet- Page 50 of 771 Page 2 of 341 May 9 Finance Committee review of Overall Budget with a focus on Operations and Maintenance, Self-I nsurance, and Debt Service May 11 Engineering & Operations Committee review of Capital Improvement Budget (CIB) May 26 Presentation of Budget by staff at Board Meeting June 16 Public Hearing on Budget Adoption Commencing on page 45 of the FY 2022-23 draft Budget book, the Financial Summary section provides a comprehensive synopsis of the core elements of Central San's entire budget including analysis of specific funds, revenues, expenses, and reserves. A presentation providing an overview of the proposed FY 2022-23 budget was provided to the Board at the May 26, 2022 public meeting. Additionally, a presentation providing an overview of the FY 2022-23 Cl B as well as the long-term (ten-year) Capital Improvement Plan (CI P)was provided to the Board that same day. At the May 26, 2022 meeting, the Board was asked to review and provide feedback on the proposed FY 2022-23 Budget following presentations by staff. Incorporating feedback from Board Members as well as various District staff, several minor revisions were made to the draft of Budget provided to the Board on May 5, 2022. California Environmental Quality Act (CEQA) Staff has evaluated the FY 2021-22 O&M, Sewer Construction, Self-I nsurance, and Debt Service Fund budgets and concludes the adoption of these budgets are not projects, are ministerial in nature, and are exempt from CEQA. They are exempt under Central San's CEQA Guidelines Section 15301, since each funds the ongoing operations of Central San and the Capital Improvement Budget funds the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of use beyond that existing at the present time. Approval of the FY 2021-22 Budgets will establish the Board of Directors' independent finding that these budget documents are exempt from CEQA. The Board further finds that, although the Capital I mprovement Program Budget will authorize amounts of individual capital improvement project spending, the adoption of the Budget does not authorize construction of any project requiring CEQA compliance documentation. Central San either has or will produce appropriate CEQA compliance documentation prior to undertaking any"project" identified in these documents. ALTERNATIVES/CONSIDERATIONS During FY 2021-22, the Board has considered numerous financial planning alternatives and assumptions, most recently at the March 24, 2022 publicly held financial workshop. This budget reflects the policy direction provided in areas including the composition and level of the Capital Improvement Budget in the context of the Comprehensive Wastewater Master Plan, responsibly managing unfunded liabilities, including for three new permanent full-time equivalent positions to address new needs, and overall guidance regarding the need for fiscal discipline and cost control. FINANCIAL IMPACTS Adoption of the proposed FY 2022-23 budget will provide Central San the resources necessary to accomplish Strategic Plan Objectives directed by the Board for that year. The FY 2022-23 budget was prepared using the sewer service charge revenue assumptions per the adopted four-year rate plan. Sewer service charge revenues in FY 2022-23 are proportioned as follows: O&M 41.1%; Capital 57.4%; Self-Insurance 1.4%. June 16, 2022 Regular Board Meeting Agenda Packet- Page 51 of 771 Page 3 of 341 COMMITTEE RECOMMENDATION The Finance Committee received a staff presentation of the FY 2022-23 O&M, Self-Insurance, and Debt Service fund budgets on May 9, 2022. The Engineering and Operations Committee reviewed the Capital Improvement budget on May 11, 2022. Both Board Committees provided feedback to staff, which has been considered in the final version of the budget book attached hereto. A log of revisions made subsequent to the distribution of the initial draft of the budget book on May 5, 2022, has been attached hereto (Attachment 2). Also, staff has provided a marked up version of the Ten-Year C I P summary (Attachment 3)to more clearly illustrate the changes made on pages 303-306 as referenced in the budget revisions log. RECOMMENDED BOARD ACTION Conduct a public hearing and adopt the FY 2022-23 Central San Budget as follows: 1. Find that the FY 2022-23 Budget is exempt from CEQA; and 2. Adopt the proposed FY 2022-23 Budget for the: a. Operations and Maintenance fund; b. Capital Improvement fund; c. Self-Insurance fund; and d. Debt Service fund. Strategic Plan Tie-In GOAL ONE: Customer and Community Strategy 1—Deliver high-quality customer service, Strategy 2—Maintain a positive reputation GOAL TWO:Environmental Stewardship Strategy 1—Achieve 100%compliance in all regulations, Strategy 2—Anticipate and prepare for potential regulatory changes, Strategy 3—Support regional development of local water supply, Strategy 4- Reduce reliance on non- renewable energy GOAL THREE:Fiscal Responsibility Strategy 1—Maintain financial stability and sustainability, Strategy 2—Ensure integrity and transparency in financial management GOAL FOUR: Workforce Development Strategy 1—Proactively plan for future operational staffing needs, Strategy 2—Foster relationships across all levels of Central San, Strategy 3—Inspire employee engagement, Strategy 4—Meet or exceed industry safety standards GOAL FIVE:Infrastructure Reliability Strategy 1—Manage assets optimally to prolong their useful life, Strategy 2—Execute long-term capital renewal and replacement program, Strategy 3—Protect personnel and assets from threats and emergencies GOAL SIX:Innovation and Optimization Strategy 1—Implement the Central San Smart Initiative, Strategy 2—Improve and modernize operations through technology and efficiency measures June 16, 2022 Regular Board Meeting Agenda Packet- Page 52 of 771 Page 4 of 341 GOAL SEVEN:Agility andAdaptability Strategy 1—Maintain a safe working environment for employees and the public during the COVID-19 pandemic , Strategy 2—Plan ahead for scenarios of direct adverse impacts ATTACHMENTS: 1. Final FY 2022-23 Draft Budget as of 06-09-22 2. Budget Revision Log 3. Revisions to CI P Summary Page June 16, 2022 Regular Board Meeting Agenda Packet- Page 53 of 771